Helpful Tips

Take Action to Protect and Manage Your Money


KEEP YOUR MONEY SAFE

Here are some ways to take action to protect your money:

  • Use the Card Carefully

    Keep track of your balance so you don’t get charged a fee for trying to spend more than is available. If your wages or other benefits are deposited directly onto the card, make sure you know the amount of the deposit and when it will happen.

  • Keep Your PIN Secret

    Pick a number that’s hard for someone else to guess – not your birthday or address. Don’t tell it to anyone or write it anywhere it could be easily found.

  • Get the Important Info

    Make sure you know your card issuer’s policies for lost or stolen cards, and keep your card number and the customer service phone number in a safe place at home.

  • Act Quickly

    If your card is lost or stolen, let the card issuer know right away. Most card issuers will freeze the funds so the card can’t be used and send you a new card with your remaining balance on it.

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SAVINGS

Savings can help you achieve any financial goal. Whether it’s a comfortable retirement, a down payment for a house, or a new car or stereo, you can get there by setting money aside. And best of all, you can have what you want without getting bogged down in debt.

Yet if you’re like most people, you don’t save as much as you’d like to. Or you don’t save at all. Americans spend more than we earn. Consider that the national personal savings rate has dipped to the lowest point since the Great Depression. Today’s high energy, home and food prices may make saving seem less possible than ever.

But the time is now. And with a little forethought and effort, saving money is not only possible, it’s easy.

Make Saving a Priority

You’ll be more likely to save money if you make it a priority. Sit down and figure out what you’d like to save money for – retirement, a house, car, college, dream vacation –and how much it will cost.

Then make your plan:

  • Set a timeline for when you’d like to reach your goal.
  • Set a schedule by dividing the total goal amount by the number of weeks, months or pay periods between now and your goal date.
  • Be vigilant by treating your savings contribution just like any other must-pay expense, such as rent or groceries.
Find Money to Save

While it may seem difficult sometimes just to make ends meet, chances are you have extra money you didn’t even know about.

Here are some ways to find it:

  • Keep track of everything you spend for a week. You might be surprised what you’re buying, and what you can do without.
  • Lower your bills. Many creditors will give borrowers a lower interest rate if they’re asked. Also, conserving electricity and gas can make a big difference.
  • Rank your nonessential expenses. Keep the ones you like the best and cut the items on the bottom of the list.
  • Pack a lunch. Or cook more dinners at home. Eating out at restaurants can eat up a lot of money that could be saved.
Pay Yourself First

You’re probably inclined to pay everyone else first – whether it’s your landlord or your grocer or the electric company. But it’s vital to start paying yourself first by saving money. Once you’ve made a contribution to your financial longevity and well-being, then you can divide up your money to cover everything else. Don’t worry. You’ll more than likely have plenty left over to cover everything you need.

Check with your employer. Companies will often deduct savings from paychecks if asked.
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BUDGETING

A budget is a plan for your future income and expenditures that you can use as a guideline for spending and saving. Although many Americans already use a budget to plan their spending, the majority of Americans also routinely spend more than they can afford. The key to spending within your means is to know your expenses and to spend less than you make. A good monthly budget can help ensure you pay your bills on time, have funds to cover unexpected emergencies, and reach your financial goals.

Most of the information you need is already at your fingertips. To create or rework your budget, follow the simple steps outlined below to get a clear picture of your monthly finances.

  1. Add Up Your Income

    To set a monthly budget, you first need to determine how much income you have. Write a dollar figure next to each relevant income source. Make sure you include all sources of income such as salaries, interest, pension and any other income–including a spouse’s income if you’re married.

    If you get a salary, be sure to use your take-home pay rather than your gross pay. Taxes are usually taken out automatically, but if they’re not, remember to include them as another expense. If you receive money from somewhere not listed, enter the source along with the amount under “other income.”

  2. Estimate Expenses

    The best way to do this is to keep track of how much you spend for one month. Divide your spending into fixed and flexible expenses. Fixed expenses are those that generally do not change from month to month, such as rent and insurance payments. Flexible expenses are those that do change from month to month, such as food or entertainment. If some of your expenses for one or more categories change significantly each month, take a three-month average for your total.

  3. Figure Out The Difference

    Once you’ve totaled up your monthly income and your monthly expenses, subtract the expense total from the income total to get the difference. A positive number indicates that you’re spending less than you earn–congratulations. A negative number indicates that your expenses are greater than your income. This means you will need to trim your expenses in order to begin living within your means.

Well done–you’ve created a budget. The next step is to track your budget over time to make sure you’re sticking to it. If you find you aren’t able to follow your budget successfully, it may mean that your plan isn’t flexible enough. It can take revisiting your budget a few times to find the balance that works for you.

HANDLING THE UNEXPECTED

There’s nothing harder to plan for than unexpected events that impact your life and finances. Yet loss of a job, the death of a loved one, illness or other unexpected occurrences happen at one point or another in most of our lives. The key to successfully surviving these life-changing events from a financial perspective is to anticipate hard times. Shore up your financial situation before you are hit with an unexpected expense, so you will be covered in the event something happens.

The Importance of an Emergency Fund

Because we cannot predict when life will throw us an unexpected challenge, it is important for everyone to build and maintain an emergency fund with three to six months’ worth of living expenses. The key to building an emergency fund is to set money aside every month, no matter how small the amount. Financial experts recommend that, unlike retirement funds, emergency savings should be kept fairly liquid, in a savings account or a money market fund. Hopefully you will never need it. But if you do, you’ll be glad it’s there.

A New Financial Picture

Once the immediate financial matters are taken care of after an unexpected life event, it will be time to take stock of your new financial situation and create a plan for yourself moving forward. Whether you have faced job loss, divorce, illness or another event, you should create a new budget reflecting your situation. This is the first step toward financial security and rebuilding your emergency fund, which you may have tapped into to manage a financial crisis.

To develop a budget, write down your current expenses, indicating whether each expense is a necessity or a luxury. Next, estimate your monthly income, including only income that you are certain you will receive. Then compare your income to expenses. If your expenses are higher, you will need to trim your expenses until your income is higher than your expenditures.
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DEBT

If you’re in debt, you’re not alone. Consumer debt in America is extraordinarily high. Sometimes it’s hard to know – or admit – if you have a problem with debt. It can be overwhelming to realize that you’ve gotten in over your head, and to worry that you won’t be able to pay back what you owe. The key to getting out of your situation is to act now. Don’t procrastinate. Taking charge of your finances and creating a plan for tackling your debt will cut down your anxiety and get you on the path toward a better financial future.

First, ask yourself whether debt has become a problem for you. Here are some circumstances that might indicate it has:

  • Next month’s bills arrive before last month’s have been paid
  • Your bills often include late fees
  • You avoid opening bills when they arrive in the mail
  • You procrastinate balancing checkbooks
  • You bounce checks
Write it Out

Do you actually know how much debt you have? Many people don’t. Start by making a list of everything you owe, whether it’s a mortgage, a credit card balance, student loans or even money you borrowed from family or friends.

Write down:

  • The lender’s name
  • The amount you owe
  • The term of the loan
  • The interest rate and fees

Then total them up. Looking at the numbers can be worrisome, but this is a positive – and necessary – first step to tackling your debt.

Be realistic

Now that you have analyzed your debt situation, it’s time to look at your monthly budget and set realistic goals. That trip you had planned for next summer, or the new car you were hoping to buy may not be in the cards right now given your new outlook on reducing your debt.

Don’t get discouraged

Reducing debt is like losing weight. You’re not going to lose 50 pounds in a month – you need realistic goals in reasonable timeframes, and debt works the same way. For most people, it takes years to become debt-free. This doesn’t mean you have to stop enjoying your life. It’s just a reminder to live within your means and be diligent about adjusting any spending habits that have contributed to the situation you are in today.

Dedicating yourself to paying off what you owe and becoming debt-free will be worth the wait, with the payoff being a brighter financial future.

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